Editorial: 1 percent property tax cap is starving counties

By The Herald Editorial Board

Since 2007, Washington state’s 39 counties have been on a voter-imposed revenue diet, not allowed to collect more than 1 percent additional in property tax revenue than was collected the previous year.

That 1 percent cap was born out of Tim Eyman’s Initiative 747, passed by the voters in 2000. While it was found unconstitutional by the state Supreme Court a year later, the Legislature re-enacted the cap during a 2007 special session.

In that time, county governments, including Snohomish County, have indeed slimmed down. Snohomish County, mandated to provide the same core services it always has, now does that with 150 fewer county employees throughout its departments.

But Snohomish County officials and county officials throughout the state say the revenue cap isn’t trimming fat any longer, but cutting into the muscle and bone required to offer the services that county residents depend upon, especially those for law enforcement, courts and county jails.

Increasingly, public safety makes up a larger portion of county spending. County Executive Dave Somers says that when he started as a county council member 15 years ago, public safety accounted for about 56 percent of the county budget; the figure now is 76 percent.

That’s a figure shared by most counties, said Eric Johnson, executive director of the Washington State Association of Counties, during a meeting last week with The Herald Editorial Board.

Even as counties have diverted money from other departments to keep sheriff deputies on the road and courts and jails staffed, counties have had to make cuts to that core duty, Johnson said. In the past decade, counties have cut law enforcement staffing by about 5 percent, about 118 officers; 13 counties don’t offer 24-hour patrols; nine counties are operating jails over their designed capacity; prosecutors are seeking more plea bargains and court proceedings are more frequently delayed.

The diversions from other departments have meant less money for county roads and bridges and cuts to departments and services, including public health, elections, senior services, parks and recreation, housing programs, cooperative extension, sewer treatment and solid waste, growth management and planning and more.

A recent study showed Snohomish County has about a $96 million backlog in facility needs and infrastructure improvements, some of which is being addressed with the recently approved courthouse renovation.

The 1 percent cap on property tax revenue cuts deep because counties rely on only two sources of tax revenue: the property tax and sales tax. And the property tax accounts for about 67 percent of each county’s tax revenue. By contrast, the state and cities draw from a more diversified revenue portfolio that includes property and sales taxes, but also utility taxes and business taxes.

The 1 percent cap allows counties to seek more by going to the voters, and counties that don’t take the 1 percent increase during one or more years can “bank” that capacity for later use. Snohomish County is doing just that to help pay for the renovation of the county courthouse. About a third of counties bank that capacity, Somers said, but are wary of using it and hold it in reserve for emergencies and unforeseen expenditures.

What the counties seek now is to scrap the 1 percent cap and replace it with a maximum limit that is based on inflation and each county’s population growth up to 5 percent above the previous year.

While the 1 percent cap has still allowed for counties’ revenues to grow between 1 percent and 3 percent, due in part to growth, the counties are seeing their costs increase 3 percent to 5 percent to sustain current employment and program levels. The cap isn’t allowing counties to maintain the same level of service from year to year.

Legislation has been proposed in both House and Senate that would replace the cap, and there’s bipartisan support for each. House Bill 1764, for example, was co-sponsored by Rep. John Koster, R-Arlington, a former Snohomish County council member familiar with the budget crunch.

And Republicans in the Senate have provided some cover for the counties, whether they intended to or not. In proposing a levy swap as part of their K-12 education funding plan, Senate Republicans elected not to put the same 1 percent cap on the state’s property tax levy for schools.

If Senate Republicans recognize that capping the property tax puts an unworkable limit on the revenue raised for schools, how then can counties fairly be expected to manage under that cap?

Using inflation and population growth as proposed, Snohomish County would have been able to increase its property tax revenue by up to 4.6 percent, according to county estimates. That doesn’t mean the county would have taken that full amount, Somers said, but county officials want that flexibility to collect what they need for the services they need to provide.

“This is about local control,” Johnson said.

This wouldn’t mean a full 5 percent increase on property tax bills. The Snohomish County’s take from each $1 of property tax collected amounts to about 14 cents in the most recent budget.

Taxpayers, in passing the 1 percent cap, wanted to see some accountability by county governments. For a decade, counties have lived within that limit, found efficiencies, made cuts and improved procedures.

The 1 percent cap is no longer about getting county officials to live within their means; it has become a starvation diet that threatens public safety and other important services.

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